Right Hemisphere defends itself again over government loan

CEO says success could open doors for other New Zealand companies

Local technology company Right Hemisphere is defending itself in the face of further criticism of a US$8 million (NZ$10.4 million) government loan it received last year.

CEO Mark Thomas says Right Hemisphere has drawn down the second (US$3m) tranche of the loan, though this does not necessarily mean it has spent the whole of the first US$5m tranche. The loan has been “generally invested in the growth of the company”, boosting capability in development, sales and customer support systems, he says.

In a Commerce Select Committee hearing last month, MPs again raised doubts about the wisdom of the loan. However, the arrangement was staunchly defended by economic development minister Trevor Mallard.

The loan is interest-free for three years, providing Right Hemisphere sticks to the terms of the agreement, which include commitments to collaborate with New Zealand universities in research programmes and help foster a “cluster” of organisations active in the commercial application of 3D images, a field known as Product Graphic Management (PGM).

The loan came through the government’s Strategic Initiatives Fund, and is unique in its size and terms, though Cabinet papers discussing it refer to another recipient, whose name has been concealed for reasons of commercial confidentiality.

Thomas says the success of the company’s three-dimensional graphics software could open the door of an international market to other New Zealand software companies. These companies could exploit both the company’s software and its international contacts.

Though Right Hemisphere’s major success to date has been in engineering, with clients such as Boeing and helicopter maker Sikorski, the 3D object will become a staple of commercial communication in the future, much as text, two-dimensional charts, photographs and video are today, Thomas says.

There are opportunities, for example, in supply-chain management, he says, where an order for parts could incorporate a realistic image of the part concerned, ensuring it is the correct one and will feed properly into an assembly process. He sees the company’s 3D images as applicable to a range of other areas, from computer gaming to geographical information systems.

“We’ve deliberately chosen to build a horizontal platform,” he says.

Locally, New Zealand Steel is piloting an application of the technology to do with loading of rolled steel sheets for transport.

The company has seen its pipeline of “qualified prospects” grow, Thomas says, and is doing a healthy eight-figure annual volume of business.

The latest Companies Office records show Right Hemisphere with $2,398,000 turnover and a deficit of $1,743,000 for the year ended March 31, 2005. Right Hemisphere currently has just over 100 staff, and 55% to 60% of these are working in this country, says Thomas.

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